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Netflix Forays Into Audio Streaming With SiriusXM Partnership

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Netflix (NFLX - Free Report) is partnering SiriusXM ((SIRI - Free Report) to enter the audio streaming market.

Reportedly, SiriusXM, will play a 24 hour commercial free comedy channel unofficially named Netflix Is a Joke. The channel, which is expected to be available by January 2019, will include current and original content of Netflix’s vast collection of comedy content.

With Netflix’s domestic video streaming market reaching saturation, the company is looking for new ways to expand its portfolio and drive subscription growth.

It is also likely that Netflix will use the radio platform as its advertising medium to promote its comedy specials and the newly announced global comedy event featuring 47 comedians.

However, the company will collide with radio comedy providers, exclusive to SiriusXM and other radio broadcasters.

Comedians the New Force of Netflix?

Netflix, over the past few years, has been heavily investing in the comedy genre by teaming up with A-listers like Dave Chapelle, Ellen DeGeneres, Adam Sandler and Jerry Seinfeld.

The streaming giant has also brought onboard many international comedians in its efforts to consistently provide fresh content to its subscribers.

Netflix’s attempt to create countless shows for its users and always have new content is what makes it so popular among consumers. This is evident from the company’s decision to produce a same-sex comedy film and a comedy show Murder Mystery featuring one of the top Hollywood stars, Jennifer Aniston.

Moreover, Netflix has been the largest buyer of stand-up specials, releasing around 50 specials this year so far. The company is expected to spend 85% of total spending or about $8 billion on original content in 2018 alone.

Notably, the company plans to release 470 originals by 2018, which will take the total count for the year to nearly 1,000. Moreover, the company is now set to release 86 original movies in 2018 compared with 61 in 2017.

Netflix’s investments are proving to be fruitful as 40 of its shows, in varied genres, have been selected for the prestigious Emmy nominations this year. Hence, the company’s strength in creating quality content is clearly evident.

Higher Spending to Attract Subscribers

In the last reported quarter, Netflix added 5.2 million subscribers, 1 million short of the company’s estimate for the quarter. Notably, paid streaming members across the globe were 124.35 million, up 25.5% from the year-ago quarter.

We believe Netflix’s aggressive spending to develop original content will help it to expand subscriber base. However, competition is intensifying, as companies like Amazon (AMZN - Free Report) and Apple (AAPL - Free Report) are also acquiring content at a rapid pace.

In such a scenario, Netflix’s foray into the radio space will diversify its revenue source as well as expand its subscriber base.

Currently, Netflix carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

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